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Index of Service Production: This will be an index specifically designed to measure the output of the service sector on a monthly basis, utilizing data from the Goods and Services Tax (GST).

MoSPI Service Index: On Monday, the Ministry of Statistics and Programme Implementation (MoSPI) announced preparations to introduce a new monthly indicator—dubbed the 'Index of Service Production' (ISP)—to measure the output of the formal service sector every month. This index will primarily utilize Goods and Services Tax (GST) data, thereby enabling close monitoring of activities within the service sector.

While releasing an 'Approach Paper' on this subject on Monday, the Ministry of Statistics sought comments by May 5—regarding its plan to construct a Service Production Index (ISP) for the formal sector of the economy, using the year 2024-25 as the base year. This paper has been released just ahead of the scheduled revision of the Index of Industrial Production (IIP) next month. This initiative forms part of a broader series of changes being implemented by MoSPI in government statistics.

What is its objective?

Currently, while an 'Index of Industrial Production' (IIP) exists for the manufacturing sector, there is no such monthly indicator available for the service sector. The ISP aims to bridge this gap. This is particularly crucial given that the service sector contributes over 50 percent to India's GDP. The index will encompass more than 40 sub-sectors, including wholesale and retail trade, transport, storage, telecommunications, banking, insurance, real estate, hotels, and restaurants.

What will be the data source?

As previously mentioned, the GST Network will serve as the primary source of data, providing information regarding production and supply figures across various sectors. Additionally, for sectors exempt from GST—such as education and healthcare—administrative data obtained from relevant ministries and other organizations will be utilized.

What will be the benefits? Since the service sector accounts for half of the economy, this data will assist the government in making timely and appropriate decisions, as well as in formulating the budget. If, for instance, people were to suddenly start spending more on hotels or flights, this data would clearly indicate that this sector is currently on an upward trajectory.